Class 11 Accountancy - Chapter Trail Balance and Rectification of Errors NCERT Solutions | Describe the purpose for the preparation
Describe the purpose for the preparation of trial balance.
Trial balance is not the financial statements and it could not be submitted to the key end users instead of financial statements. This statement is prepared for the purpose of drafting financial statements, reviewing errors, checking mathematically correctness of entry, and so on.
Normally at the end of the period, the accountant might need to prepare the financial statements and other related financial reports for management.
Accountants need to make sure that the ledgers are correctly entered according to the accounting equation so that the financial statements are mathematically correct. This is the reason why an accountant needs to prepare a trial balance.
In short, trial balance is prepared for the purpose of identifying and detecting errors that enter in general ledgers. It is also used as the working papers for accountant and auditors in drafting financial statements.
As mentioned above, if the debit side is over the credit side, that means the accounting entry is not mathematically correct. In this case, the accountant needs to double check his accounting entries and classification.
Maybe the amount of the specific transaction is not equally entered between the debit side and credit side. Or maybe the classification is not correctly classified with respect to accounting equations.
It is important to note that trial balance could not detect all the errors that make during the entry. For example, the elimination of entities both in debit and credit still makes trial balance reconcile.
Trial balance is prepared in four or five columns and lists down all closing general ledgers by ranging the ledgers from assets account to liabilities and equity.
Income statements account like revenues and expenses are listed down subsequently after equity.
This is to make sure that the preparer of financial statements is easy to identify which items belong to assets, liabilities, equity, revenues and expenses.
The main important element that should include in this statement is the account name, reference, balance before adjustment, adjusting entry, and balance after adjustments.
Sometimes, this statement is printed out along with the five financial statements for management purposes. But it is generally not.
More Questions From Class 11 Accountancy - Chapter Trail Balance and Rectification of Errors
- Q:-
Which of following errors will be rectified through suspense account:
(a) Sales return book undercast by Rs. 1,000.
(b) Sales return by Madhu Rs. 1,000 not recorded.
(c) Sales return by Madhu Rs. 1,000 recorded as Rs. 100.
(d) Sales return by Madhu Rs. 1,000 recorded through purchases returns book. - Q:-
A Trial balance is prepared:
(a) After preparation financial statement.
(b) After recording transactions in subsidiary books.
(c) After posting to ledger is complete.
(d) After posting to ledger is complete and accounts have been balanced. - Q:-
If suspense account does not balance off even after rectification of errors it implies that:
(a) There are some one sided errors only in the books yet to be located.
(b) There are no more errors yet to be located.
(c) There are some two sided errors only yet to be located.
(d) There may be both one sided errors and two sided errors yet to be located. - Q:-
If the trial balance agrees, it implies that:
(a) There is no error in the books.
(b) There may be two sided errors in the book.
(c) There may be one sided error in the books.
(d) There may be both two sided and one sided errors in the books. - Q:-
Which of the following is not an error of commission:
(a) Overcasting of sales book.
(b) Credit sales to Ramesh 5,000 credited to his account.
(c) Wrong balancing of machinery account.
(d) Cash sales not recorded in cash book. - Q:-
Depreciation written off on furniture 1,500 was not posted to depreciation account.
This is an error of ..................................
The wrong effect has been:The correct effect should have been:
The rectification entry will be.
- Q:-
Trial balance is:
(a) An account.
(b) A statement.
(c) A subsidiary book.
(d) A principal book. - Q:-
Record the rectification entry for the following transactions:
Credit sales to Rajni 5,000 recorded in Purchases book:
This is an error of ..........................................
State the wrong entry recorded in the book of accountsCorrect effect should have been:
The rectification entry will be:
- Q:-
Tick the Correct Answer
Agreement of trial balance is affected by:
(a) One sided errors only.
(b) Two sided errors only.
(c) Both (a) and (b).
(d) None of the above. - Q:-
Which of the following is not an error of principle:
(a) Purchase of furniture debited to purchases account.
(b) Repairs on the overhauling of second hand machinery purchased debited to repairs account.
(c) Cash received from Manoj posted to Saroj.
(d) Sale of old car credited to sales account.
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